Question 1

Journal entries are required if the bank reconciliation includes outstanding checks.

Accepted Answer

A) True 
 B)False

Question 2

Under the Sarbanes-Oxley Act, accounting firms are allowed to audit a public company and provide certain consulting services for the same client.

Accepted Answer

A) True 
 B)False

Question 3

An information system is one of the five components by which a company can achieve its internal control objectives.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is a key element of good internal control?

Accepted Answer

A) having latest version of information system installed 
B) having audits at periodic intervals 
C) having a good working environment for employees 
D) allowing no vacations and job rotations 
A) having latest version of information system installed 
B) having audits at periodic intervals 
C) having a good working environment for employees 
D) allowing no vacations and job rotations

Question 5

In a bank reconciliation, a book error will be shown on the bank side of the reconciliation.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following describes "firewall"?

Accepted Answer

A) a malicious program that enters program code or destroys data without authorization 
B) when two or more people cooperate together to defraud a company 
C) a technique for protecting data 
D) when a company defrauds its suppliers by making false claims 
A) a malicious program that enters program code or destroys data without authorization 
B) when two or more people cooperate together to defraud a company 
C) a technique for protecting data 
D) when a company defrauds its suppliers by making false claims

Question 7

A document authorizing a cash payment is a(n):

Accepted Answer

A) check. 
B) invoice. 
C) voucher. 
D) bill of lading. 
A) check. 
B) invoice. 
C) voucher. 
D) bill of lading.

Question 8

Internal auditors monitor company controls to safeguard assets and ensure that employees are following company policies.

Accepted Answer

A) True 
 B)False

Question 9

A petty cash fund was established with a $600 balance. It currently has cash of $25 and petty cash tickets as shown below.   Which of the following would be the journal entry to replenish the Petty Cash account?

Accepted Answer

A) Debit to Cash Short & Over for $55 
B) Credit Cash Short & Over for $55 
C) Debit Petty Cash $55 
D) Credit Petty Cash $55 
A) Debit to Cash Short & Over for $55 
B) Credit Cash Short & Over for $55 
C) Debit Petty Cash $55 
D) Credit Petty Cash $55

Question 10

Which one of the following documents is retained by the customer as proof of a deposit transaction?

Accepted Answer

A) a deposit receipt 
B) a cancelled check 
C) a bank reconciliation 
D) a signature card 
A) a deposit receipt 
B) a cancelled check 
C) a bank reconciliation 
D) a signature card

Question 11

A pharmaceutical company testing drugs to determine possible side effects is a part of:

Accepted Answer

A) monitoring controls. 
B) information systems. 
C) control procedures. 
D) risk assessment. 
A) monitoring controls. 
B) information systems. 
C) control procedures. 
D) risk assessment.

Question 12

The following information is available for Jade Company for the month ending June 30, 2014. • Balance as per the bank statement is $11,240.
• Balance as per books is $10,200.
• Check #506 for $1,200 and check #510 for $900 were not shown on the June 30, bank statement.
• A deposit in transit of $3,110 had not been received by the bank when the bank statement was generated.
• A bank debit memo indicated an NSF check for $85 written by Jane Smith to Jade Company on June 13.
• A bank credit memo indicated a note collected by the bank of $2,100 and interest revenue of $55 on June 20.
• The bank statement indicated service charges of $20.
What is the adjusted book balance?

Accepted Answer

A) $12,740 
B) $12,250 
C) $8,150 
D) $8,200 
A) $12,740 
B) $12,250 
C) $8,150 
D) $8,200

Question 13

Internal control is an organizational plan that ensures that the financial statements are prepared and submitted in time.

Accepted Answer

A) True 
 B)False

Question 14

In a good internal control system, which of the following documents are required for proper approval of a payment to a supplier?

Accepted Answer

A) a journal entry, a supplier invoice, and a description of the goods being purchased 
B) a receiving report, an invoice, and a purchase order 
C) a purchase order, a journal entry, and a price catalog 
D) a supplier invoice, a bill of lading, and the supplier's financial statements 
A) a journal entry, a supplier invoice, and a description of the goods being purchased 
B) a receiving report, an invoice, and a purchase order 
C) a purchase order, a journal entry, and a price catalog 
D) a supplier invoice, a bill of lading, and the supplier's financial statements

Question 15

Before signing a check, the controller or the treasurer should examine the purchase order, the invoice, and the receiving report to determine that the company received the goods and that the company is paying only for the goods received.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following items are reconciling items on the book side of the reconciliation?

Accepted Answer

A) outstanding checks and correction of book error 
B) deposit in transit and NSF check 
C) bank service charge and outstanding checks 
D) bank service charge and correction of book error 
A) outstanding checks and correction of book error 
B) deposit in transit and NSF check 
C) bank service charge and outstanding checks 
D) bank service charge and correction of book error

Question 17

A company received a bank statement showing a balance of $75,100. Reconciling items included outstanding checks of $2,250, and a deposit in transit of $9,500. What is the company's adjusted bank balance?

Accepted Answer

A) $63,350 
B) $67,850 
C) $82,350 
D) $65,600 
A) $63,350 
B) $67,850 
C) $82,350 
D) $65,600

Question 18

Which of the following led to the passage of the Sarbanes-Oxley Act?

Accepted Answer

A) the stock market crash of 2002 
B) the savings and loan bailout 
C) the accounting scandals of WorldCom and Enron 
D) the mounting government deficit 
A) the stock market crash of 2002 
B) the savings and loan bailout 
C) the accounting scandals of WorldCom and Enron 
D) the mounting government deficit

Question 19

Check payment for $658 was incorrectly entered in the cash account as $856. Which adjustment needs to be made?

Accepted Answer

A) decrease the book balance 
B) decrease the bank statement balance 
C) increase the book balance 
D) increase the bank statement balance 
A) decrease the book balance 
B) decrease the bank statement balance 
C) increase the book balance 
D) increase the bank statement balance

Question 20

For good controls over cash payments, the company officer approving a payment voucher should be the same as the person who ordered the goods, to ensure that the correct amount of cash is paid.

Accepted Answer

A) True 
 B)False

Exam 8: Internal Control and Cash

Journal entries are required if the bank reconciliation includes outstanding checks.

Under the Sarbanes-Oxley Act, accounting firms are allowed to audit a public company and provide certain consulting services for the same client.

An information system is one of the five components by which a company can achieve its internal control objectives.

Which of the following is a key element of good internal control?

In a bank reconciliation, a book error will be shown on the bank side of the reconciliation.

Which of the following describes "firewall"?

A document authorizing a cash payment is a(n):

Internal auditors monitor company controls to safeguard assets and ensure that employees are following company policies.

A petty cash fund was established with a $600 balance. It currently has cash of $25 and petty cash tickets as shown below. Which of the following would be the journal entry to replenish the Petty Cash account?

Which one of the following documents is retained by the customer as proof of a deposit transaction?

A pharmaceutical company testing drugs to determine possible side effects is a part of:

Internal control is an organizational plan that ensures that the financial statements are prepared and submitted in time.

In a good internal control system, which of the following documents are required for proper approval of a payment to a supplier?

Before signing a check, the controller or the treasurer should examine the purchase order, the invoice, and the receiving report to determine that the company received the goods and that the company is paying only for the goods received.

Which of the following items are reconciling items on the book side of the reconciliation?

A company received a bank statement showing a balance of $75,100. Reconciling items included outstanding checks of $2,250, and a deposit in transit of $9,500. What is the company's adjusted bank balance?

Which of the following led to the passage of the Sarbanes-Oxley Act?

Check payment for $658 was incorrectly entered in the cash account as $856. Which adjustment needs to be made?

For good controls over cash payments, the company officer approving a payment voucher should be the same as the person who ordered the goods, to ensure that the correct amount of cash is paid.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters